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Federal consumer bureau head Elizabeth Warren made no apologies Wednesday for the new agency's involvement in ongoing settlement negotiations with some of the nation's largest mortgage servicers, whose widespread flawed foreclosure practices drew national attention last fall.

"If there had been a cop on the beat with the authority to hold mortgage servicers accountable a half dozen years ago, if there had been a consumer agency in place, the problems in mortgage servicing would have been exposed early and fixed while they were still small, long before they became a national scandal," Warren said in testimony before a House Financial Services subcommittee. She is the Obama administration's point person for setting up the new Consumer Financial Protection Bureau.

If anything, Warren said, the uproar over shoddy foreclosure practices illustrated the need for an agency dedicated solely to protecting ordinary borrowers from abuses by lenders.

"I am glad that the consumer agency has been able to provide assistance in this important matter," Warren said. "I thank Congress for creating this agency to provide a voice for American families. That's why we're here, and that's what we're doing."

Some Republicans on Capitol Hill have questioned the CFPB's participation in the talks because it has no permanent director in place and because it will not have formal regulatory authority until it opens in July.

Sen. Richard C. Shelby (R-Ala.) recently accused Warren and the CFPB of leading "a regulatory shakedown," because of their aggressive push for strict penalties against servicers in the pending settlement negotiations.

A collection of federal agencies and state attorneys general recently submitted a 27-page term sheet to the nation's largest banks proposing wholesale changes to mortgage servicing practices and a greater focus on modifying loans for troubled borrowers.

In a separate letter Tuesday to Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, Geithner said that the CFPB would "not be a party to any formal settlement with mortgage servicers" - a fact Warren reiterated Wednesday.

Warren quickly encountered skepticism from House Republicans who criticized the broad powers granted to the new bureau and its seemingly untouchable budget, both of which they argued could lead to a lack of accountability and the creation of unnecessary and burdensome new regulations.

GOP members have proposed making the bureau's appropriations subject to congressional approval, rather than coming directly from the Federal Reserve - part of a series of efforts to roll back portions of the far-reaching overhaul of financial regulations that President Obama signed into law in July.

"The president hasn't even nominated a director to head this agency more than six months after he signed the law creating the new bureau," Bachus said at Wednesday's hearing. "It is entirely sensible to limit the bureau's funding until we know more about the bureau and its needs."

In her 34-page written testimony, Warren detailed the new watchdog's goal of improving consumer credit markets on issues ranging from better mortgage disclosures to more transparent credit-card agreements. She argued that those changes won't necessarily harm banks.

"For too long, regulation has been described as undermining the free market. This is wrong," she said in her written remarks. "Good regulation is not about impeding market forces; it is about channeling those forces to make the market work better. Good regulation is not about retribution designed to make an industry suffer; it is about rooting out deception and promoting transparency so that honest competition actually works."

As for accountability, Warren noted that the new bureau must submit annual financial reports to Congress, justify its budget to lawmakers and submit to government audits. Its rules also can be overturned by a council of top regulators known as the Financial Services Oversight Council.

"In brief, there will be more oversight and accountability of the CFPB than of any other federal banking regulator," she said.